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Consent benefits​

PPG Canada Inc. (PPG) is in the business of automotive glass manufacturing and operated two facilities in Oshawa and Hawkesbury, Ont. In October 2008, PPG sold its Canadian business to Pittsburgh Glass Works LLC (PGW). It was agreed that the collective agreement between Unifor and PPG would continue in effect between Unifor and PGW as successor employer. PGW also established the Pittsburgh Glass Works, ULC Duplate Division – CAW Pension Plan (PGW Plan) as a successor to the pension plan that had been in place for the individuals previously employed by PPG (PPG Plan). PGW made announcements that it would be closing the Oshawa facility and the Hawkesbury facility on December 1, 2008 and May 9, 2009 respectively. PGW then declared a wind-up of the PGW Plan. The wind-up of the PGW Plan triggered a partial wind-up of the PPG Plan.

Section 4.04(a) of the PPG Plan provided that “any Employee who has at least 10 years of Credited Service and has attained the age of 55 years, but not age 65, may be retired at the option of the Company or under mutually satisfactory conditions. . . . To an Employee retired in accordance with this subparagraph, there shall be payable an immediate monthly Pension Benefit equal to his Accrued Pension at his date of early retirement.”

In the wind-up reports filed by PPG, PPG took the position that no PPG Plan members were entitled to this benefit and attributed no value to this benefit in its wind-up report. The Ontario Superintendent of Financial Institutions (Superintendent) issued a notice of intended decision indicating an intention to reject the wind-up reports and require that new reports be filed reflecting the value of section 4.04(a) of the PPG Plan in determining liabilities. PPG then filed a request for hearing seeking an order that the Superintendent approve the wind-up reports. At issue at the hearing was whether the early retirement benefit established by section 4.04(a) of the PPG Plan was a “consent benefit” as described in section 74(7) of the Pension Benefits Act(Ontario) (PBA) to which PPG Plan members who have met the age and service qualifications are entitled on the effective date of the wind-ups. Section 74(7) of the PBA provides where employer consent is an eligibility requirement for entitlement, it is “deemed” to have been given at wind-up and the benefit must be valued.

After considering and determining that the Financial Services Tribunal (FST) had jurisdiction to consider the request for hearing on its merits, the FST considered whether the employer’s consent was an eligibility requirement for the benefit under section 4.04(a) of the PPG Plan.

The FST held that the reference to “mutually satisfactory conditions” in section 4.04(a) of the PPG Plan does not require negotiation with Unifor. The FST held that “mutually satisfactory conditions” is a common term in pension plans and refers to conditions agreeable to both the employer and the retiring plan member. The FST held that the employer’s consent is required for the benefit in section 4.04(a) and it is therefore a “consent benefit” to which section 74(7) of the PBA applies.

Finally, the FST considered whether the section 4.04(a) benefit was a “funded consent benefit.” The FST held that the only eligibility requirements for the early retirement benefit in section 4.04(a) of the PPG Plan were age, years of service and the employer’s consent, which is deemed to have been provided on plan wind-up. The FST held that where parties establish consent benefits and the eligibility requirements necessary for such benefits are met with the exception of employer consent, the parties have no ability to decide that retiring PPG Plan members will not be entitled to the benefits. The deemed consent established in the PBA is a minimum standard and the fact that the parties had a practice of ignoring statutory rights does not affect the eligibility requirements. The FST held that section 4.04(a) establishes a funded consent benefit and members who meet the eligibility requirements are entitled to that benefit on PPG Plan wind-up by virtue of section 74(7) of the PBA. It was therefore necessary for PPG to value the benefit in its wind-up reports.

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